Financial Audit: Independent Counsel Expenditures for the Six Months
Ended September 30, 1998 (Letter Report, 03/31/99, GAO/AIMD-99-105).
Pursuant to a legislative requirement, GAO presented the results of its
audits of expenditures reported by seven offices of independent counsel
for the 6 months ended September 30, 1998, focusing on whether the
statements of expenditures complied with the financial reporting
requirements of the law.
GAO noted that: (1) the statements of expenditures for the offices of
independent counsel were reliable in all material respects; (2) GAO's
consideration of internal controls, which was limited for the purpose of
determining GAO's procedures for auditing the statements of
expenditures, disclosed no material weaknesses; and (3) GAO's audits
included limited tests of compliance with laws and regulations that
disclosed no reportable instances of noncompliance with the laws and
regulations GAO tested.
--------------------------- Indexing Terms -----------------------------
REPORTNUM: AIMD-99-105
TITLE: Financial Audit: Independent Counsel Expenditures for the
Six Months Ended September 30, 1998
DATE: 03/31/99
SUBJECT: Financial statement audits
Internal controls
Accounting procedures
Administrative costs
Reporting requirements
Financial records
Auditing procedures
Independent counsels
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covers1-2.book GAO United States General Accounting Office
Report to Congressional Committees
March 1999 FINANCIAL AUDIT Independent Counsel Expenditures for
the Six Months Ended September 30, 1998
GAO/AIMD-99-105
GAO/AIMD-99-105
United States General Accounting Office Washington, D. C. 20548
Lett er
Page 1 GAO/AIMD-99-105 Independent Counsels
GAO
Accounting and Information Management Division
B-281406 Letter March 31, 1999 Congressional Committees Enclosed
is our opinion on the statements of expenditures of seven offices
of independent counsel for the 6 months ended September 30, 1998.
This audit was required by 28 U. S. C. 596( c)( 2) (1994) and
Public Law 100- 202.
We are sending copies of this report to the Attorney General, the
Director of the Administrative Office of the U. S. Courts, the
independent counsels included in our audit, and other interested
parties. Copies will be made available to others upon request.
David L. Clark Director, Audit Oversight and Liaison
Page 2 GAO/AIMD-99-105 Independent Counsels
Contents Letter 1 Opinion Letter 4 Appendix I Statement of
Expenditures for
Independent Counsel Adams/ Thompson
12 Appendix II Statement of Expenditures for
Independent Counsel Barrett
15 Appendix III Statement of Expenditures for
Independent Counsel Bruce
18 Appendix IV Statement of Expenditures for
Independent Counsel Lancaster
21
Page 3 GAO/AIMD-99-105 Independent Counsels
Appendix V Statement of Expenditures for
Independent Counsel Smaltz
24 Appendix VI Statement of Expenditures for
Independent Counsel Starr
27 Appendix VII Statement of Expenditures for
Independent Counsel von Kann
31
Abbreviations
AOUSC Administrative Office of the U. S. Courts FBI Federal Bureau
of Investigation IRS Internal Revenue Service OIC Office of
Independent Counsel
United States General Accounting Office Washington, D. C. 20548
Lett er
Page 4 GAO/AIMD-99-105 Independent Counsels
GAO
Accounting and Information Management Division
B-281406 Letter Congressional Committees This report presents the
results of our audits of expenditures 1 reported by seven offices
of independent counsel (OIC) for the 6 months ended September 30,
1998. The Department of Justice and the independent counsels are
required under 28 U. S. C. 594( d)( 2),( h), and 596( c)( 1)
(1994) to report on expenditures from a permanent, indefinite
appropriation
established within Justice to fund independent counsel activities.
To satisfy the requirements of 28 U. S. C. 596( c)( 2) and Public
Law 100- 202, we audit the statements of expenditures prepared by
the independent counsels.
We found that the statements of expenditures presented in
appendixes I through VII, for the offices of independent counsel
Arlin M. Adams/ Larry D. Thompson, David M. Barrett, Carol Elder
Bruce, Ralph I. Lancaster, Donald C. Smaltz, Kenneth W. Starr, and
Curtis E. von Kann, respectively, were reliable in all material
respects. Our consideration of internal controls, which was
limited for the purpose of determining our procedures for auditing
the statements of expenditures, disclosed no material weaknesses.
Further, our audits included limited tests of compliance with
laws and regulations that disclosed no reportable instances of
noncompliance with the laws and regulations we tested. The
following sections provide background information, outline each
conclusion in more detail, and discuss the scope of our audits.
Background The Ethics in Government Act of 1978 amended title 28
of the United States Code to authorize the judicial appointment of
independent counsels when the Attorney General determines that
reasonable grounds exist to warrant further investigation of high-
ranking government officials for certain alleged crimes. The
independent counsel law (28 U. S. C. 591- 599 (1994)) is intended
to preserve and promote the accountability and integrity of public
officials and of the institutions of the federal government. The
Independent Counsel Reauthorization Act of 1994 further amended
title 28 of the United States Code to establish certain procedural
requirements and extend the law's expiration date to June 30,
1999. 1 The term expenditures as used in this report generally
means cash disbursed.
B-281406 Page 5 GAO/AIMD-99-105 Independent Counsels
The independent counsel law directs the Department of Justice to
pay all costs relating to the establishment and operation of
independent counsel offices and designates specific
responsibilities to the Administrative Office of the U. S. Courts
(AOUSC) for independent counsels' administrative support. Justice
periodically disburses lump- sum payments to AOUSC for this
purpose. In 1987, Public Law 100- 202 established a permanent,
indefinite appropriation within Justice to fund expenditures by
independent counsels. Independent counsels are required to report
their expenditures from the appropriation for each 6- month period
in which they have operations. We are required to audit
expenditures from the permanent, indefinite appropriation and to
report our findings to appropriate congressional committees.
During any 6- month period, other significant costs incurred in
support of the work of independent counsels are paid from
appropriations other than the permanent, indefinite appropriation
established to fund independent counsel activities. These costs
arise when an independent counsel uses detailees from other
federal agencies, such as the Federal Bureau of Investigation
(FBI). Independent counsels are not required to and do not reflect
such costs in their statements of expenditures. However, these
unaudited costs are identified and discussed in the notes to the
statements presented in the appendixes to this report.
Opinion on Statements of Expenditures
Independent counsels prepare their statements of expenditures
principally on a cash basis of accounting, which is a
comprehensive basis of accounting other than generally accepted
accounting principles. The bases
of accounting are described in note 1 of each counsel's statement.
In our opinion, the statements of expenditures for the offices of
independent counsel Arlin M. Adams/ Larry D. Thompson, David M.
Barrett, Carol Elder Bruce, Ralph I. Lancaster, Donald C. Smaltz,
Kenneth W. Starr, and Curtis E. von Kann present fairly, in all
material respects, the
expenditures of these counsels for the 6 months ended September
30, 1998, on the basis of accounting described in note 1 to each
office's statement.
B-281406 Page 6 GAO/AIMD-99-105 Independent Counsels
Consideration of Internal Control Structure
We gained an understanding of internal controls whose objectives
are to safeguard assets against loss from unauthorized
acquisition, use, or
disposition; assure the execution of transactions in accordance
with laws governing the use of budget authority and with other
laws and regulations that have a direct and material effect on the
statements of expenditures; and
properly record, process, and summarize transactions to permit
the preparation of reliable statements of expenditures and to
maintain accountability for assets.
The purpose of our consideration of internal controls was to
determine our procedures for auditing the statements of
expenditures and, accordingly, we do not express an opinion on
internal controls. However, for the controls we tested, we found
no material weaknesses in the internal control structure and its
operations for the 6- month period ended September 30, 1998. A
material weakness is a condition in which the design or operation
of one or more of the internal control structure elements does not
reduce to a relatively low level the risk that errors or
irregularities in amounts that would be material to the statements
of expenditures may occur and not be detected promptly by
employees in the
normal course of performing their duties. Our internal control
work would not necessarily disclose all material weaknesses.
Compliance With Laws
and Regulations Our audit tests for compliance with selected
provisions of laws and
regulations disclosed no instances of noncompliance that would be
reportable under generally accepted government auditing standards.
However, the objective of our audit was not to provide an opinion
on
overall compliance with laws and regulations. Accordingly, we do
not express such an opinion.
Objectives, Scope, and Methodology
In order to carry out their financial operations and to ensure
accountability, independent counsels are responsible for
preparing statements of expenditures in conformity with the basis
of accounting described in the accompanying notes, establishing
and maintaining an internal control structure to provide
reasonable assurance that the internal control objectives
previously mentioned are met, and
B-281406 Page 7 GAO/AIMD-99-105 Independent Counsels
complying with applicable laws and regulations. We are
responsible for obtaining reasonable assurance about whether the
statements of expenditures reported by independent counsels are
reliable (free of material misstatement and presented fairly, in
all material respects,
in conformity with the basis of accounting described in the
accompanying notes). Also, we are responsible for obtaining a
sufficient understanding of internal controls to plan the audits
and for testing compliance with selected provisions of laws and
regulations.
In order to fulfill these responsibilities, for each independent
counsel, we examined, on a test basis, evidence supporting the
amounts and
disclosures in the statement of expenditures and notes thereto,
except items indicated as unaudited; assessed the accounting
principles used by management; evaluated the overall presentation
of the statement of expenditures; obtained an understanding of
the internal control structure related to safeguarding assets,
compliance with laws and regulations (including execution of
transactions in accordance with budget authority), and
financial reporting; tested relevant internal controls over
safeguarding assets, compliance, and financial reporting; and
tested compliance with certain aspects of selected provisions of
the independent counsel provisions of 28 U. S. C. 591- 599 (1994),
5 U. S. C. Chapter 55, and implementing regulations relating to
pay administration.
We limited our internal control testing to those controls
necessary to achieve the objectives outlined in our statement on
internal controls. Because of inherent limitations in any internal
control structure, losses, noncompliance, or misstatements may
nevertheless occur and not be detected. We also caution that
projecting our evaluation to future periods is subject to the risk
that controls may become inadequate because of changes in
conditions or that the degree of compliance with controls may
deteriorate. We did not test compliance with all laws and
regulations applicable to the offices of independent counsel. We
limited our tests of compliance to those which we deemed
applicable to the statements of expenditures. We caution that
noncompliance may occur and not be detected by these tests
and that such testing may not be sufficient for other purposes.
B-281406 Page 8 GAO/AIMD-99-105 Independent Counsels
We obtained, but did not audit, information on costs that were not
paid from the permanent, indefinite appropriation established to
fund independent counsel activities. We obtained information on
these costs from the independent counsel offices; the Department
of Justice, including the FBI; the Internal Revenue Service; the
Department of the Treasury; and
the Office of Inspector General for the Department of Agriculture.
We discussed the results of our work with representatives of the
seven offices of independent counsel and AOUSC and have
incorporated their comments where appropriate.
We performed our audits in accordance with generally accepted
government auditing standards.
David L. Clark Director, Audit Oversight and Liaison
March 12, 1999
B-281406 Page 9 GAO/AIMD-99-105 Independent Counsels
List of Committees The Honorable Ted Stevens Chairman The
Honorable Robert C. Byrd Ranking Minority Member Committee on
Appropriations United States Senate
The Honorable Fred Thompson Chairman The Honorable Joseph I.
Lieberman Ranking Minority Member Committee on Governmental
Affairs United States Senate
The Honorable Orrin G. Hatch Chairman The Honorable Patrick J.
Leahy Ranking Minority Member Committee on the Judiciary United
States Senate
The Honorable C. W. Bill Young Chairman The Honorable David R.
Obey Ranking Minority Member Committee on Appropriations House of
Representatives
The Honorable Dan Burton Chairman The Honorable Henry A. Waxman
Ranking Minority Member Committee on Government Reform House of
Representatives
B-281406 Page 10 GAO/AIMD-99-105 Independent Counsels
The Honorable Henry J. Hyde Chairman The Honorable John Conyers,
Jr. Ranking Minority Member Committee on the Judiciary House of
Representatives
Page 11 GAO/AIMD-99-105 Independent Counsels
Page 12 GAO/AIMD-99-105 Independent Counsels
Appendix I Statement of Expenditures for Independent Counsel
Adams/ Thompson Appendi x I
Appendix I Statement of Expenditures for Independent Counsel
Adams/ Thompson
Page 13 GAO/AIMD-99-105 Independent Counsels Let t er
Appendix I Statement of Expenditures for Independent Counsel
Adams/ Thompson
Page 14 GAO/AIMD-99-105 Independent Counsels Let t er
Page 15 GAO/AIMD-99-105 Independent Counsels
Appendix II Statement of Expenditures for Independent Counsel
Barrett Appendi x I I
Appendix II Statement of Expenditures for Independent Counsel
Barrett
Page 16 GAO/AIMD-99-105 Independent Counsels Let t er
Appendix II Statement of Expenditures for Independent Counsel
Barrett
Page 17 GAO/AIMD-99-105 Independent Counsels Let t er
Page 18 GAO/AIMD-99-105 Independent Counsels
Appendix III Statement of Expenditures for Independent Counsel
Bruce Appendi x I I I
Appendix III Statement of Expenditures for Independent Counsel
Bruce
Page 19 GAO/AIMD-99-105 Independent Counsels Let t er
Appendix III Statement of Expenditures for Independent Counsel
Bruce
Page 20 GAO/AIMD-99-105 Independent Counsels Let t er
Page 21 GAO/AIMD-99-105 Independent Counsels
Appendix IV Statement of Expenditures for Independent Counsel
Lancaster Appe ndi x I V
Appendix IV Statement of Expenditures for Independent Counsel
Lancaster
Page 22 GAO/AIMD-99-105 Independent Counsels Let t er
Appendix IV Statement of Expenditures for Independent Counsel
Lancaster
Page 23 GAO/AIMD-99-105 Independent Counsels Let t er
Page 24 GAO/AIMD-99-105 Independent Counsels
Appendix V Statement of Expenditures for Independent Counsel
Smaltz Appe ndi x V
Appendix V Statement of Expenditures for Independent Counsel
Smaltz
Page 25 GAO/AIMD-99-105 Independent Counsels
Appendix V Statement of Expenditures for Independent Counsel
Smaltz
Page 26 GAO/AIMD-99-105 Independent Counsels Let t er
Page 27 GAO/AIMD-99-105 Independent Counsels
Appendix VI Statement of Expenditures for Independent Counsel
Starr Appe ndi x VI
Appendix VI Statement of Expenditures for Independent Counsel
Starr
Page 28 GAO/AIMD-99-105 Independent Counsels Let t er
Appendix VI Statement of Expenditures for Independent Counsel
Starr
Page 29 GAO/AIMD-99-105 Independent Counsels Let t er
Appendix VI Statement of Expenditures for Independent Counsel
Starr
Page 30 GAO/AIMD-99-105 Independent Counsels Let t er
Page 31 GAO/AIMD-99-105 Independent Counsels
Appendix VII Statement of Expenditures for Independent Counsel von
Kann Appe ndi x VI I
Appendix VII Statement of Expenditures for Independent Counsel von
Kann
Page 32 GAO/AIMD-99-105 Independent Counsels Let t er
Appendix VII Statement of Expenditures for Independent Counsel von
Kann
Page 33 GAO/AIMD-99-105 Independent Counsels (911901) Let t er
Appendix VII Statement of Expenditures for Independent Counsel von
Kann
Page 34 GAO/AIMD-99-105 Independent Counsels
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